"The housing crisis, the stock market declines and the unemployment numbers are taking their toll on spending," he said.

The report measures the dollar volume of sales at existing chain stores on a year-over-year basis. Niemira said a decline in October is rare as the month generally signals the beginning of the holiday spending season.

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But the financial crisis that exploded into the headlines this October caused a spending pullback that punished high-end retailers while providing a mild benefit to some discounters, he said.

Among the high-end retailers that suffered from the October retreat were Saks, off 16.6 percent in year-over-year, same-store comparisons. Nordstrom was down 15.7 percent in October. Same-store sales at San Francisco's Gap fell 16 percent in October. Macy's suffered a milder 6.3 percent falloff this October compared with last year.

In contrast to the retreat experienced by high-end and brand-name stores, Wal-Mart reported that sales at existing stores rose 2.4 percent in October.

"Consumers are focused on necessities," said analyst Ken Perkins with RetailMetrics, which also tracks the sector.

Scott Krugman, a vice president with the National Retail Federation, cautioned that the same-store sales report tells only part of the picture because it focuses on the nation's largest retail chains and excludes Internet sales, new stores, and small or regional stores. A more complete analysis won't be available until next Friday, when the Census Bureau posts its comprehensive retail sales report for October.

"With that said, we do expect weaker sales for the holiday season," said Krugman.

The National Retail Federation expects that retail sales will grow 2.2 percent around Christmas, less than the 4.4 percent that is typical for that time of year.

The International Council of Shopping Centers has a more bearish estimate. It predicts sales growth of 1 percent during the year-end period, down from its previous estimate of 1.7 percent.

Stuart Gabriel, a professor of finance at the UCLA Anderson School of Management, said the October retail sales figures reflect the reluctance of consumers to spend money given their worries about the job market, the value of their stocks or retirement funds and, most importantly, the worth of their homes, which remains, for most people, the key variable in their own sense of wealth.

"We're going to see an ongoing period of weakness in spending," said Gabriel, who is the co-author of a recent scholarly paper on what economists call the housing wealth effect.

"Consumers are recognizing the seriousness of the situation and are becoming very bearish," Gabriel said.

The sluggishness has been apparent in San Francisco, where a regular economic snapshot from the city controller's office has detected softer activity in the Union Square retail district based on indirect measures such as daily parking garage counts and a decline in Saturday ridership to the Powell Street BART Station, jumping off point for transit-based shopping trips.

More bad economic news is expected today when the Labor Department issues the October unemployment report. A survey of economists conducted by Bloomberg News found that the median estimate is that 200,000 jobs probably evaporated during that month of financial crisis.

Cutbacks in holiday spending, due to the economic downturn, don't apply to gifts for pets, report says. C5